Greece will use its worst debt crisis in decades to rebuild itself, Prime Minister George Papandreou pledgedtonight as he unveiled reforms to set right the parlous state of the nation's public finances.

In a televised address in which he acknowledged the "reasonable concerns" that the economy has caused for Greece's EU partners, Papandreou outlined "a road map" of change to shore up competitiveness, combat corruption, crack down on tax evasion and overhaul the public sector.

"There are certain moments in the history of a nation when the choices made define the decades to come," the socialist leader said. "Today is such a moment. It is time to address and resolve, once and for all, deep-rooted problems that are holding the nation back."

Athens has come under pressure from the ECB to adopt radical measures to rebuild its economy after a credit downgrade by the Fitch ratings agency last week, which rocked world markets and brought into question its eurozone membership.

With its debt amounting to a staggering ¤3bn and deficit slated to swell to 12.7% of GDP, Papandreou set out an ambitious programme of fiscal targets to reduce the deficit by almost 4% next year. He vowed it would fall to 3% by the end of his government's four-year term in 2013.

Savings would be made by reducing government operating expenditures, consumption costs and trimming the bloated public sector. For every five civil servants who retired only one would be hired. National tourism offices abroad would be cut, a third of short-term contracts in the public sector abolished, military expenditure reduced and supplies to hospitals and other state enterprises monitored.

"We will protect the vulnerable and middle class – we are not here to dismantle the welfare state," said Papandreou, adding that red tape would be cut to increase competitiveness and badly-needed foreign direct investment.

With the country's international credibility at stake, he called on "each and every Greek" to participate in the rebuilding of the country.

Whether the long-awaited measures will appease Greece's EU partners was unclear. Papandreou's reluctance to follow the example of Ireland, which announced a ¤4bn correction of its 2010 budget with public sector salary cuts of five to 15%, has had a lukewarm reception from analysts.

The Greek finance minister Giorgos Papaconstantinou concedes that next year will be critical. The minister, who will spell out the measures in detail this week in a whirlwind tour of European capitals, including London, insisted that with the requisite political will Greece will simply need time for the reforms to bear fruit.

"By the end of 2010 we need to have demonstrated significant changes," he said. "However, by mid-2010 there should be enough signs out there to reassure the international community that we are moving fast and in the first quarter of 2010, by looking at the increases in tax receipts and the curtailing of public expenditures, there should be enough first indications to calm the markets and buy us the time necessary for the kind of reforms that we want to bear fruit."